Regulator challenges trade sites over fake reviews

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23rd Feb 2016

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Firms that employ questionable tactics to endorse their offering online have been told in no uncertain terms to get on the right side of consumer law. The Competition and Markets Authority (CMA) criticised two tradespeople sourcing websites, Checkatrade and Trustatrader, and three care home review sites Carehome.co.uk, Care Opinion and Most Recommended Care, for not providing a "complete picture when making buying decisions”.

Carehome.co.uk and Care Opinion had given care homes the option to restrict the publication of reviews. While Checkatrade, Trustatrader and Most Recommended Care did not ensure reviews received are checked properly for genuine or fraudulent content (it's worth noting that the CMA said these businesses "engaged constructively" when these concerns were raised and agreed to implement procedural changes).

Collectively, the firms have agreed to cease restricting reviews, ensure that user generated content is genuine, and that both good and bad reviews are published. The latter commitment remedies a remarkable deception, considering the detrimental and life-changing consequences of withholding poor reviews, particularly in the care and trades sectors.

Who are the CMA fighting for?

If a brand makes use of star ratings, consumers do not trust a product that has five stars because they think it to be “too good to be true”. ​

The general public are captivated by and invested in user generated content, with nearly 95% of shoppers consulting reviews during their browsing and buying journey. As such, the Advertising Standards Authority (ASA) and the CMA have cast a steely eye over brands orchestrating manipulative review practices and launched an investigation in 2015 to make sure those using reviews online were doing so in a way that was in the best interests of consumers. In its initial report and call for information, the CMA discovered that 42% of consumers leave reviews, while 80% of consumers believed that online reviews are genuine.

When those 80% are vulnerable consumers, such as the elderly, or their concerned and risk-aware families, the deception is all the more outrageous.

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Building a reputation based on authenticity

Building a reputation as a small business takes time and resource, but to attracting new customers and building a business. If consumers discover that a brand has misled them or withheld critical information it can cause irreparable damage to a brand's perceived trustworthiness and subsequently its bottom line.

Endorsements and reviews are a great way of helping to build reputation, but businesses shouldn’t seek quick wins by taking shortcuts. The CMA has identified several areas of concern when it comes to online reviews – from businesses concealing negative reviews, posting fake reviews and failing to disclose paid for endorsements. But this isn’t just frowned upon – it’s illegal.

In its investigation, the CMA discovered that millions of reviews fabricating positive product and service appraisals were populating review sites. It also found that third-parties were also courting undeclared sponsored or advertorial content – in exchange for payment – and disingenuously encouraging their audience to invest.

The CMA uncovered brands actively writing their own reviews, publishing fabricated content to third-party review sites and constructing negative reviews to damage the reputation of competitors. The CMA have taken a hard line with businesses big and small, and consumers and brands are starting to feel the wrath of the new laws. Giants such as Sports Direct have been probed for blocking negative reviews, while Amazon has sued independent sellers flooding its marketplace with fake content.

Brands that care for their reputation, but that have invested little attention or funds to cultivate user generated content should take note of the new regulations to enhance their image and presence in the marketplace.

Brands should make peace with the regulations (and reap the spoils)

Higher priced items and items with questionable safety – such as care and tradespeople – have a higher risk associated with purchase and this prompts heavier involvement from consumers as they consider purchase. But it’s not fair just to point the finger at these industries as it’s likely there will be many more firms and industries who are found in breach of consumer law this year. For small businesses, now is the time to ensure your review policies and processes are working in favour of the consumer not against them.

Contrary to popular belief, balanced reviews that acknowledge the good and bad of a product or service can actually help firms make more money, not to mention they are essential for the consumer decision-making process.

For small businesses, now is the time to ensure your review policies and processes are working in favour of the consumer not against them.

According to a study by PowerReviews and Northwestern University, if a brand makes use of star ratings, consumers do not trust a product that has five stars because they think it to be “too good to be true”. Instead, products with average rating star ratings of 4.2 to 4.5-stars are more trusted by consumers and prompt conversion and sales, a good reason alone to showcase all reviews no matter if they are good or bad (as long as they are genuine).

Moreover, brands refusing to publish poor feedback are making life much more difficult for themselves. In the same study, PowerReviews discovered that 82% of shoppers seek out negative reviews, and yet, consumers still choose to buy. Sometimes the reason for the negative review is irrelevant, or the reviewer is perceived as unreasonable, but in any case a balanced perception helps brands to establish trust and authenticity and firms would be well placed to remember this.

What should SMEs do to make sure they are on right side of the law?

1) Embrace negative reviews: Regulations forbid brands from censoring negative reviews and the good news is that they’re not something to be scared of. Remember that 82% of shoppers seek out negative reviews to get a balanced picture. Most people are savvy enough to discount overwhelmingly positive reviews as biased and research suggests that purchases drop off after an average 4.5-stars anyway.

2) Stomp and weed out fake reviews: The authenticity of reviews is what makes them so powerful. Fake reviews mislead customers, it’s as simple as that. Both negative and positive reviews should be checked for fraud, otherwise only false negative ones will ever be removed or blocked. Publish all genuine reviews and ensure that your review collection procedure allows this.

3) Get authentic paid-for reviews, but make sure they’re flagged: Endorsements are not illegal and can help you sell your product – but the issues arise when you fail to disclose the relationship. Keep your interests and company protected by supplying a disclaimer at the beginning of any endorsement negotiation. If the third party does not disclose the endorsement, ensure to follow-up and make the relationship as transparent as possible.

4) Accept responsibility and learn the law: Adhering to online review practices isn’t just a ‘nice to do’. If you fail on any of these counts, you may be in breach of the Consumer Protection from Unfair Trading Regulations 2008. Consumers trust reviews. And, it’s the responsibility of brands and retailers to provide authentic content that consumers can trust.

Replies

TripAdvisor must be a hotbed of fake reviews? I automatically discount any venues that have rave reviews and 5 * across the board - but a small number of reviews. But I have also seen some obviously fake (negative) reviews on some venues which look as though they have been posted by competitors. I've often wondered how these don't potentially fall foul of libel laws.
Great article - esp. warning people about care sector

This article has in factual elements.
As the Founder of Checkatrade I know the facts on this and anyone wishing to contact the CMA can to confirm.
We were contacted by the CMA asking if we would be willing to take part in a study of the review industry. We had nothing to hide, in fact we saw it as a chance to set an industry standard and if in the process we saw anything that could be improved we thought that would be a great opportunity. So working with our Primary Authority Trading Standards partner (Kent CC) we opened our doors to the CMA.
The three of us together made a few tweaks and we have now been signed off by the CMA and they have thanked us for our input into this industry.
The Regulator has not declared war on Checkatrade, they have not stated we defraud vulnerable consumers and we have not been blasted by the CMA or rapped over the knuckles, as this article suggests.

We volunteered and opened our doors to the CMA and I assume the other companies mentioned in this did the same.

The CMA in their press release did state they are investigating other review sites and stated a report on this was going to be forthcoming.

Kevin,
I was really surprised when reading this article because I've always considered Checkatrade as a very reliable and honest organisation. I know a lot of tradespeople who use it and I think Checkatrade has always been a true reflection.
I'm glad you've responded to this to set the record straight, but I'm sure you know the reality is that more people will read the start than will see your response. The fact it appears to be written by someone who represents another review system feels shocking!

Hi Rob,
Businesszone have contacted me. I have sent them the press releases from the CMA to read for themselves. Let's hope this site does the right thing, reads them and adjusts the article.
I don't mind criticism if it's founded on fact, but this is typical sensationalised journalism.
We'll see what they do.
Thanks

I've updated the article and sent you a note confirming the changes. While the points made in the article were accurate it's crucial we take the right tone and on review I felt that wording in the first few paragraphs of the article was too strong.